The importance of the Nigerian market in African banking is undeniable. With a population of 216m it could hardly be otherwise. Zenith Bank is the biggest bank in West Africa, with $2.5bn in capital, while Nigerian banks fill 13 of the places in the West and Central African regional Top 20 of our annual survey of Africa’s Top 100 banks.
Yet although the Nigerian banking sector has acquired a reputation for stability as a result of the Central Bank of Nigeria’s efforts to encourage consolidation and boost minimum capital levels over the past two decades, the country’s banks are still underperforming given that its biggest bank is just the 14th largest on the continent.
This chasm between potential and performance is perhaps the result of the eternal problem of Nigeria continuing to rely far too heavily on its ailing oil industry.
Access Bank, also of Nigeria, has moved up from fourth to second in our rankings over the past year on the back of a jump in capital from $1.6bn to $2.1bn. Ecobank Transnational, which is the biggest non-Nigerian entry in our West African table, is ranked fifth. Although based in Togo, Ecobank operates in 36 countries, perhaps the highest number of any bank, although the rapid growth that it enjoyed a decade ago now appears to have plateaued.
As the African Continental Free Trade Area (AfCFTA) begins to take shape, it seems likely that more banks will seek to provide greater continent-wide coverage. One of the aims of the AfCFTA is to erode cross-border barriers to African banks operating in multiple markets, while banks are likely to expand their operations into other countries in order to serve the various exporters keen to make the most of the new trade arrangements.
This process should encourage more foreign banks to enter the Nigerian market but equally offers opportunities for Nigeria’s established banking giants to expand across the continent.
Increase in depth
There has been a significant increase in the depth of West and Central African banks this year. Rawbank makes it into our West Africa Top 20 with $231m in capital, a big jump on the $159m Banque de Développement du Mali needed to secure the same position last year.
There are only four Francophone banks in the Top 20 if Ecobank is included but this is largely a function of the fragmented nature of Francophone West Africa, with no states able to rival Nigeria in terms of population or GDP. Nevertheless, it is perhaps surprising that there is no Ivorian bank in our table in comparison with three from Ghana given that they have similar GDPs.
Central Africa has just one representative in our Top 100: BGFI Gabon in 36th place. The bank accounts for just 0.59% of the capital of the Top 100, a tiny proportion given its dominance in the region. Central Africa thus accounts for a miniscule proportion of the continent’s banking capital in relation to the size of its population. Its underrepresentation underlines the limited role of the private sector in the region’s economic activity and the extent to which it relies on the export of raw materials.
The regional Top 20
The Top 100 Banks survey ranks the banks according to their Tier 1 capital. This consists of: capital + reserves + retained earnings + minority interests. These are published in local currencies and then converted into US dollars at the exchange rates at the year-end date in the results (or on 31 December 2021), so changing FX rates can affect the ranking.
We collect the data from Bankers’ Almanac, Moody’s Analytics BankFocus and the in-house research of African Business, excluding some banks where data is old or unreliable. The table below lists the Top 20 banks in the West African region along with their positions in the continental ranking.